Dollar weakens after jobs report disappoints

The U.S. dollar fell against its major rivals on Friday, erasing an early upward bias after a much smaller-than-expected rise in May nonfarm payrolls, raising new concerns about economic growth and dashing hopes that the Federal Reserve might be more aggressive in raising rates.

The report was seen as lessening the odds for the Fed to raise rates later this month.

“This was a bad report. We know payrolls are volatile, but in the bigger context it shows that job creations are slow,” said Alessio de Longis, a portfolio manager at OppenheimerFunds. “This reduces the case that the Fed can surprise with more hawkishness; it doesn’t give them any more urgency to raise interest rates, and that keeps a ceiling on where the dollar can go in the near term.”

The buck has been struggling thus far in 2017, falling nearly 5% over the past three month.

“The dollar is in a trendless market,” de Longis said. “It is being pushed around by opposing forces: it is supported by a high yield, but the growth momentum is favoring Europe and emerging markets. Today’s data supports that view.”

was little changed on the day, having recovered from earlier weakness that came on a day when U.K. stocks were headed toward record levels. The currency traded at $1.2891 from $1.2882.

Sterling has been volatile in recent days as opinion polls ahead of the June 8 general election in the U.K. point to a much tighter race than anyone had expected. A survey out earlier this week showed Theresa May’s Conservative Party’s lead over Labor had narrowed to three points, down from 20 points about a month ago.